Home Bitcoin News Bitcoin Scam Regulators warn U.S. banks on crypto dangers together with 'fraud and scams' – CNBC

Regulators warn U.S. banks on crypto dangers together with 'fraud and scams' – CNBC

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Ether has massively outperformed bitcoin since each cryptocurrencies shaped a backside in June 2022. Ether’s superior positive factors have come as buyers anticipate a serious improve to the ethereum blockchain known as “the merge.”
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U.S. banking regulators warned monetary establishments on Tuesday that coping with cryptocurrency exposes them to an array of dangers, together with scams and fraud.

“The occasions of the previous yr have been marked by important volatility and the publicity of vulnerabilities within the crypto-asset sector,” the regulators mentioned in a joint statement from the Federal Reserve, Federal Deposit Insurance coverage Corp. and the Workplace of the Comptroller of the Forex. The feedback come simply weeks after the spectacular collapse of crypto exchange FTX.

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The regulators mentioned the dangers embody: “fraud and scams amongst crypto-asset sector members” and “contagion threat throughout the crypto-asset sector ensuing from interconnections amongst sure crypto-asset members.”

In the course of the crypto growth, when monetary gamers appeared to announce a brand new crypto partnership on a weekly foundation, financial institution executives mentioned they wanted additional steerage from regulators earlier than dealing extra immediately with bitcoin and different cryptocurrencies in retail and institutional buying and selling companies.

Now, about two months after the bankruptcy filing of FTX, the trade has been uncovered as rife with poor threat administration, interconnected dangers and outright fraud.

Whereas the assertion indicated that regulators had been nonetheless assessing how banks might undertake crypto whereas adhering to their varied mandates for shopper safety and anti-money laundering, they appeared to offer a clue as to which route they had been headed in.

“Primarily based on the companies’ present understanding and expertise so far, the companies imagine that issuing or holding as principal crypto-assets which can be issued, saved, or transferred on an open, public, and/or decentralized community, or related system is very more likely to be inconsistent with secure and sound banking practices,” the regulators mentioned.

Additionally they mentioned that they’ve “important security and soundness considerations” with banks that concentrate on crypto shoppers or which have “concentrated exposures” to the sector.

Conventional banks have largely sidestepped the crypto meltdown, not like the 2008 monetary disaster during which they performed a central position. One exception has been Silvergate Capital, whose shares have been battered in the past year.

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